The Infinite Game
By David Brooks
With so much exciting news about innovation in the financial industry these days, it seems we are living in the Golden Age of fintech. Global fintech giant FIS and The Venture Center are building a culture of innovation through their FIS FIntech Accelerator so that financial institutions thrive through this rapid revolution. As a member of the 2020 FIS Fintech Accelerator Cohort, and amid a global pandemic, I see the demand for innovation first hand all day, every day. Keeping up with the rapidly changing landscape can be daunting, and bankers tasked with modernizing their institutions have expressed confusion at the dizzying array of solutions now available.
Yet, while witnessing all these exciting breakthroughs, the market environment is probably the toughest we have ever seen. To win, teams must collaborate remotely, execute faster, and provide a superior client experience while maintaining perfect security. Just a few months ago, investment in technology was something banks could delay or implement slowly over the long term. But today, bankers know that without a modern, competitive tech stack, they will quickly find themselves on the path to irrelevance.
When did technology become such a big part of our industry? It certainly didn’t begin with Zoom calls and COVID. We could trace ‘fintech’ back to the invention of the internet, which has enabled the explosion of payments solutions and cloud computing. For instance, or further back, 53 years ago, when the world’s first ATM was unveiled in London. Or even a time my children would consider the stone ages, when in 1866 Moses Taylor, president of the bank now called Citigroup, made a key investment in the Transatlantic cable connecting New York to London, which laid the foundation for the global wire transfer network.
The reality is that bankers have been using technology to help their clients achieve economic success and financial security for thousands of years. Economics teaches us that lasting value is only created when adding tech to the pool of labor and capital. So banks have added accounting technology to keep track of their trade positions. They’ve added precious metals shaped into coins and paper money that can be tucked into your pocket and transported through time and space. They’ve adopted stocks and bonds, merchant processing and roboadvisors, AI algorithms, and tokens. Even the dreaded teller line was an innovation used to drive a more productive banking system!
And yet, we do seem to be living in an inflection point. Fascinating research just published by the Federal Reserve shows an unprecedented plunge in labor utilization and output (down 48%!) in 2Q20, somehow accompanied by a significant spike in labor productivity.
This puts some quantitative context to the storyline with which we’ve all become so familiar: everything shut down in March, then those who were fortunate to be still working scrambled to download and learn all the videoconferencing apps, and now we are working longer hours than before because instead of spending time commuting back and forth to an office, we are on Zoom calls.
As a grizzled banking veteran with three systemic boom/bust cycles under my belt, I strongly believe that the banking profession is noble and good. The work that we do truly matters, but it’s not about this quarter or next year. As James Carse writes, “A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play.” Banking is an infinite game that yields ever-compounding benefits to society via the wonders of technology.
One of the blessings and challenges of tech is that it provides a massive advantage, but only for a brief time. Then it is gobbled up, imitated, leapfrogged, or merged into The System. I was recently asked whether the Cirrus platform was a necessity or a luxury purchase. In fintech, we are never finished building, and today’s luxury is tomorrow’s necessity. We are stripping out waste and accelerating production. We are serving both the diet, and the dessert. What was once scarce shall become absurdly abundant.
When I decided to leave a fulfilling community banking role to start this company a couple of years ago, I knew Cirrus could provide solutions to some of the most dreadful pain points in commercial lending. COVID has revealed that those solutions are prized not only in lending but across the banking enterprise.
But our core raison d’etre has been and will remain unchanged. We are here to enrich a noble profession; to make it more enjoyable, meaningful, and productive; and to do it for the long haul. Best wishes for strong 3Q numbers from the Fed! And please let us know if we can be of service.